Take-Two Open To "Strategic Business Combination" News
Gwynne Dixon
26/03/2008
Take-Two Interactive has advised its shareholders to stand fast, while also opening the door to a possible merger...
Following EA's unsolicited conditional tender offer of $26 per share for Take-Two Interactive earlier this month, Take-Two has now deemed the offer inadequate and advised its shareholders to reject it.
Take-Two also announced that it's open to a "business combination" with third party companies, including EA, after the jewel in Take-Two's crown (GTA IV) is released on April 29th. The publisher stated that it has received "indications of interest" from third parties for such a business combination (i.e. possible merger).
In a Take-Two corporate press release, the publisher hinted at some slight underhandedness from EA, referring to its tender offer as "opportunistic" and timed to take advantage of Take-Two's forthcoming GTA IV release:
"EA launched an unsolicited bid for the company even though the company had extended an offer to negotiate with EA immediately following the release of Grand Theft Auto IV and, subject to the fiduciary duties of the board of directors, offered not to negotiate with any other third parties in the interim without first contacting EA. The board of directors believes the full commercial potential of [GTA IV] will not be evident until after its release, and that the EA Offer was timed to capture the value of that anticipated commercial success at the expense of the company's stockholders."
In order to protect its shareholders from further takeover bids from EA at the $26 per share price, Take-Two has adopted a stockholder's rights agreement that will stay in place for 180 days.
Strauss Zelnick, Take-Two's Chairman of the board, said of the agreement, "We have adopted this short-term stockholders rights agreement in order to guard against a takeover by EA at the current, inadequate price. We believe the rights agreement will ensure that the Take-Two board has adequate time to consider all strategic alternatives for maximizing value for Take-Two stockholders. The agreement will not, and is not intended to, prevent a takeover of the company on terms that are fair to and in the best interests of all stockholders."